LePage signals interest in Medicaid expansion compromise

While Gov. Paul LePage and Democratic lawmakers have sparred over Medicaid expansion for more than a year, a potential compromise could be on the horizon, with the governor now signaling a willingness to consider ideas currently bearing fruit in other states.

Any deal would likely revolve around a path followed by states such as Arkansas and Iowa. Both states rejected the by-the-book Medicaid expansion offered under the Affordable Care Act but have worked with the federal government to find other ways of getting health care for low-income residents.

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With the health insurance marketplace open for business, Outreach Specialist Libby Cummings, at Portland Community Health Center, answers questions on the phone about the new system on Oct. 1. 2013 Telegram file/Carl D. Walsh

Gov. Paul LePage

Arkansas, Iowa and other states creating new models tend to share a political dynamic similar to Maine – a divided government with Republican governors and Democrats controlling the Legislature, or vice-versa.

LePage spokeswoman Adrienne Bennett told the Maine Sunday Telegram last week that the governor is evaluating substitute plans taking hold in other states. The Republican governor also credited the Democratic Obama administration for being “open to creative solutions.”

“Gov. LePage is aware of and understands the details of these alternatives, which have been developed in other states,” Bennett wrote in an email. “Models such as those in Arkansas and Iowa, as well as the plan recently put forth by Pennsylvania’s Gov. Tom Corbett, indicate that states are seeking flexibility from the federal government before they will consider welfare expansion. A one-size-fits-all approach is not acceptable and we hope the Obama administration continues to be open to creative solutions that states develop for themselves.”

The administration does not have a specific proposal, but Bennett emphasized that LePage values the flexibility that federal officials have demonstrated in their dealings with other states on Medicaid expansion.

“Gov. LePage has consistently advocated for flexibility from the federal government because the current system is broken and financially unsustainable,” Bennett wrote. “The LePage administration will continue to evaluate these models and explore options for ensuring quality health care and fiscal responsibility.”

‘IT REQUIRES COMPROMISE’

Rep. Richard Farnsworth, D-Portland, House chairman of the Legislature’s Health and Human Services Committee, welcomed the governor’s openness on the issue.

“I am open to working with (LePage),” Farnsworth said. “We’ll test this out and see if he is serious.”

Farnsworth said a new way of thinking about solving the problem is essential.

“We’re not going to get anywhere if we do things the way we did them last time,” Farnsworth said. “We have to take a look at ways we can make this happen. It requires compromise, plain and simple.”

Alternative proposals are also starting to take root in other states, including New Hampshire and Pennsylvania.

The federal government has to approve all alternative plans to Medicaid expansion, which is a key part of the original design of the Affordable Care Act. As part of a 2012 U.S. Supreme Court decision upholding the law, states could opt out of Medicaid expansion. About half of the states, including many with Republican governors, have chosen to forgo expansion.

The Maine Legislature voted to approve Medicaid expansion earlier this year, but LePage vetoed the bill. Although the federal government would have reimbursed 100 percent of expansion costs through 2016, the governor argued that there were no guarantees of longer-term reimbursement, and that Maine was already more generous than most states with Medicaid and could not afford to shoulder additional costs.

In the wake of states’ decisions on expansion, the Obama administration has embraced the idea of state-specific solutions to improving access to health care for poor people, experts say. And Republicans have shown a willingness to build systems hewing closer to conservative principles.

The Obama administration has an incentive to approve the alternative plans, experts add, because doing so helps the administration meet the overall goals of the health care law, to provide benefits to previously uninsured low-income residents.

“The (U.S. Centers for Medicare and Medicaid Services) is being really flexible with the states, really actively engaged with them to make it work,” said Sonya Schwartz, a research fellow at Georgetown University’s Public Policy Institute. Schwartz said she expects the lure of additional federal funding will be too enticing for states, and that most if not all states currently not part of the expansion will sign up either for Medicaid expansion or a state-designed alternative in the next few years.

While Republicans have been skeptical of the life of federal subsidies, Democrats have argued that it’s foolish to refuse federal money that would provide more health care for Maine residents.

Republican state Sen. Roger Katz of Augusta, who failed in his efforts to broker a less sweeping Medicaid compromise last spring, said the other states could show a way forward.

“I have to think there’s some middle ground here,” said Katz, who consulted with state officials and lawmakers in Arkansas and Iowa about their states’ plans at a recent health policy conference. “We ought to take a hard look at these alternatives.”

In Arkansas, a Republican-leaning state with a Democratic governor and Republican-controlled legislature, the federal government a few weeks ago granted a first-in-the-nation waiver allowing the state to implement its own system.

Iowa – with a Republican governor and Democratic legislature – is not far behind, and is awaiting final approval from the federal government.

Maine Equal Justice Partners, an advocacy group that staunchly supports Medicaid expansion, is willing to consider a compromise plan such as those developed by Arkansas and Iowa, said its executive director, Sara Gagne-Holmes.

“We are not dug in that this has to be done a certain way,” Gagne-Holmes said. “We need to be creative and think about what would work in Maine.”

‘BETTER THAN DOING NOTHING’

But she said that while other states should be studied, she is concerned about systems that potentially could be too pricey for low-income residents.

In both Arkansas and Iowa, the Medicaid money would not fund expansion but would instead flow into generous subsidies to help low-income residents buy health insurance in the marketplaces that opened Oct. 1 as part of the Affordable Care Act. The subsidies would almost entirely cover insurance premiums, making it similar to being on Medicaid, experts say. However, Iowa’s proposal would require slightly higher cost-sharing for some individuals.

In Iowa, while all who would be eligible for subsidies are low-income, those with incomes at the higher end of the threshold would pay a $20-per-month premium. However, the premium would be waived if patients undergo an annual physical, screenings and complete medical assessments. Iowa also would charge patients who use the emergency room when it’s not an emergency. The idea is to improve the health of the population, which should lower health care costs.

Katz said the Iowa plan, especially, more closely jibes with conservative principles of providing a financial incentive for people to alter unhealthy behavior.

“I think the idea of personal responsibility is important and ought to be part of what we are considering. The individuals should have some skin in the game,” Katz said.

Peter Damiano, director of the Public Policy Center at the University of Iowa, said it remains to be seen whether Iowa’s plan would be better, worse or about the same as if Iowa had gone the route of the traditional Medicaid expansion. He said some elements of the plan, if successful, could encourage healthful behavior, which would drive down health care costs.

“It will definitely be better than doing nothing,” Damiano said. He said the Iowa-specific solution provided political cover for Republican Gov. Terry Branstad.

Farnsworth, the Portland Democratic legislator, said reducing emergency room usage should lower the overall cost of health care and is a worthwhile goal.

Maine does have some unique snags to work out that will make it more difficult to devise an alternative to Medicaid expansion, according to Mitchell Stein, policy director with Consumers for Affordable Health Care, an advocacy group.

For instance, the cost of private insurance is higher in Maine than Arkansas, and the gap between what Medicaid pays to providers, such as doctors and hospitals, is higher in Maine than in Arkansas and many other states.

Stein said that means shifting the program to private insurers will be more costly in Maine, and would be frowned upon by the federal government because the service would be less cost-effective.

“The truth is, it wouldn’t be as viable in Maine,” he said.

However, Stein also said that doesn’t mean a Maine-specific solution couldn’t be worked out.

But Katz said shifting administrative costs of the Medicaid expansion from the state to insurance companies is attractive and also more palatable to conservatives, because it wouldn’t increase the size of the state bureaucracy.

Other legislators gave more lukewarm responses, noting the logistical issues behind trying to start up a new system in Maine and other concerns.

Rep. Heather Sirocki, R-Scarborough, said the alternatives should be studied, but she pointed out that Maine already has a more generous Medicaid system than many other states, and the state shouldn’t set itself up for budget problems down the road.

And Rep. Drew Gattine, D-Westbrook, said that Arkansas and Iowa have already spent a lot of time devising workarounds, while Maine would be at the beginning of the process.

“There’s an awful lot of legwork involved,” Gattine said.

Rep. Sharon Treat, D-Hallowell, said she wonders if the state could create such a system if the LePage administration ended up not being an enthusiastic supporter. But Treat said an alternative to Medicaid expansion may be the only way in the current political climate to improve health care access for low-income residents.

“I’m very interested in what other states are doing, so I’m always open to discussion. I personally never give up on these things,” Treat said.

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